Basmati prices to rise 25% on lower output

Usurped by sugarcane, acreage has fallen in states like Haryana

On the back of a fall in production of basmati rice following a decline in its acreage, the country's basmati companies are planning to hike prices by about 25 per cent over the next couple of months.

This is in tune with the high prices of basmati paddy this year. Paddy price has gone up by about 25-30 per cent on account of a decline in production, according to industry estimates.

The price of pusa basmati paddy has risen to Rs 1,200 from Rs 900 a quintal, while traditional basmati paddy has moved up to Rs 1,600 from Rs 1,250 a quintal and super basmati paddy has gone up to Rs 1,450 from Rs 950 a quintal.

Companies like KRBL (owner of India Gate brand), Kohinoor Foods (owner of Kohinoor) and LT Overseas (owner of Daawat), among others, will raise their prices by 20-25 per cent. Products with revised rates should hit the market January onwards.

"There was a decline of about 20 per cent in the acreage of basmati and consequently, the production too has seen a corresponding decline. The area has been taken up by sugarcane in states like Haryana," KRBL Chairman and Managing Director Anil Mittal said.

Owing to a higher price, basmati exports may drop 20 per cent to 8.8-9 lakh tonne from the present 11 lakh tonne. However, value of exports might not decline, as the exports would take place at higher prices, he added.

Prices of commodities such as wheat, pulses and oil had gone up, so the rise in basmati prices should not be seen as something unusual, Mittal said.

"There may not be much impact on the domestic market. Consumers of traditional basmati could shift to pusa basmati, which is priced slightly lower. But basmati eaters are not likely to shift to non-basmati," said Rajiv Mangla, financial controller of Kohinoor Foods.

The export margins might come under pressure, an industry official said. Having bought paddy at a higher price without having confirmed export orders, the exporters could have a problem, he added.